Ukraine keeps CEEN, Odesa Portside in updated privatization schedule

Ukraine’s State Property Fund has updated its 2018
plan for the sale of state property to exclude all the stakes in power
distribution companies, as well as a 75% stake in power turbine producer
Turboatom (TATM UK) and a 25% stake in power GenCo Donbasenergo (DOEN UK).

It kept in its list a 99.6% stake in fertilizer
producer Odesa Portside Plant, a 100% stake in chemical plant Sumykhimprom and
a 68% stake in Zaporizhia Aluminum Plant (ZALK UZ), which it plans to offer in
May. In June, the Fund is going to offer a 78.3% stake in power GenCo
Centrenergo (CEEN UK). It also prepared a list of 59 small privatization assets
that include 25% stakes in two idle western Ukrainian oil refining plants, the
Mykolayiv Heat and Power Plant, a 99.7% stake in UkrESCo (the owner of a 25%
stake in power DisCo Cherkasyoblenergo (CHON UK)), as well as minority stakes
in Ukrsotsbank (USCB UK) and Prominvestbank.

Alexander Paraschiy: The reduced
list of assets for sale in 2018 contradicts the government’s ambitious plan to
raise UAH 22.5 bln from privatization this year, as stipulated in the state
budget. While the postponement of the sale of power distribution companies
looks logical (the discussion to shift them to RAB regulation, which might
boost their value, is  still ongoing), we see no reasons to put off the
privatization of the Turboatom stake. Also, we consider it strange for the fund
to try to sell the 25% Cherkasyoblenergo stake (controlled by UkrESCo) this
year, as such a move will significantly reduce its ability to sell the
remaining 46% stake in the future.

The key hope for sizable privatization proceeds in
2018 is in the sale of a majority stake in power GenCo Centrenergo, but we
believe it will be postponed yet again, as had been for the last four years.
That said, we will consider it a good achievement for the fund if it will be
able to beat last year’s UAH 3.3 bln privatization result.